Study Says Pre-Retirement Connection Key

Connecting with baby boomers while they are still in their working years is critical to establishing relationships for advisers, according to the third annual Lincoln Long Life Survey of baby boomers released by the Lincoln Retirement Institute.

Three out of four affluent baby boomers (with incomes in excess of $75,000) will consult with a financial adviser before they retire, and half already work with an adviser, the survey found; for those who have already retired however, just 5% say they are open to the idea of getting help with financial decisions for their remaining retirement years.

The vast majority (84%) of affluent baby boomers feel they have enough financial resources to be able to retire on their own terms, but while 93% of those surveyed report having a 401(k), IRA or retirement savings plan, only about one-third say that will provide most of their living expenses in retirement; and another quarter (27%) will rely on a pension plan as their chief source of retirement income. Nearly half of those surveyed reported they are counting on the equity in their homes or investment properties to help fund their retirement years.

Many in this group are optimistic; the survey found that because they have faith in their planning skills, boomers are confident about deciding when to retire. Despite reports of extended careers, nearly six out of 10 of these relatively affluent respondents say they plan to retire before age 65. This determination to retire before “normal” retirement age is found among more than half of both older boomers (over 50) and younger boomers (under 50). That optimism may, however, be based on questionable assumptions. Nearly two-thirds (65%) expect they will spend less money per year than while working, and though 62% of those surveyed expect to spend 20 or more years in retirement 17% speculate they will fall short or just meet their basic living expenses with their current resources.

Among this so-called “Sandwich Generation” sampling, 74% report providing financial support to a child or parent, an action which is making it more difficult to save for retirement, according to almost half of respondents with dependent adult children. One-fourth of these baby boomer caretakers have delayed their planned retirements by one year or longer as a result of providing financial support to family members but, despite those additional financial strains, boomers experiencing a generational squeeze are just as likely as the rest of the group (80% and 77%, respectively) to rate their financial situation positively.

Those sentiments notwithstanding, there is a clear positioning advantage for advisers in linking up savers while they are still employed. Not only because it provides a real chance to have a positive impact on savings behaviors and preparation – but also because it greatly enhances your ability to establish a long-term relationship.